Oiling The Tumbrels

I'm not cockeyed optimist to believe that we have achieved the heads-on-a-plate retribution that we should have been enjoying since 2008, but a federal judge has put the happy into the late afternoon.

U.S. District Judge J. Curtis Joyner in Philadelphia ruled June 30 that Mortgage Electronic Registration Systems and its parent company, Merscorp Inc., collectively known as MERS, violated Pennsylvania law by using its members-only database to circumvent county recorder of deeds offices. As a result, Joyner ruled, counties lost millions of dollars in fees, the accuracy of public records was compromised, and home loans were sold time and again without the knowledge of homeowners or county recorders. "Over the past several years, a number of residents who were facing foreclosures didn't know who owned their mortgage or to whom they should be making their mortgage payments," Joyner wrote.If the ruling stands, it would be a costly setback for MERS, which handles more than half of all home loans in the United States and was created for the purpose of avoiding the time and expense of county records.

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One county in Pennsylvania.

$16 million.

Maybe more.

And, if there's any molecule of justice left in the universe, there will be other counties and more millions of dollars.

Admittedly, a long shot, I know.

We took all the MERS mortgages between 2004 and 2011 and then multiplied them by two, assuming they were sold once," Becker said. "But other recorders in other states ... have found most of these mortgages were sold 10 to 12 times." If MERS's holdings across the state are comparable to those in Montgomery County, that could translate to more than $1 billion just in lost recording fees. Becker's suit also seeks reparations for unjust enrichment and other damages. Joyner has yet to schedule a trial to determine the extent of damages.

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Don't let the grass grow under your robes, Your Honor.

Among its other attributes, all of which involve the scamming of people who'd already been scammed, MERS is a glorious monument to the deliberately mendacious futility of American corporate self-regulation. It was designed by the mortgage industry itself in order to cut local government—in the persons of local clerks and registrars—out of the mortgage process. Nobody had to hand over actual documents any more. It was all done by computers. What happened was that, suddenly, because all the mortgages were whirling around in an anonymous electronic cerebellum, the people who had mortgages didn't really know who held them any more. The brains behind it was Angelo Mozilo, the crook behind Countrywide who one day would pay $67 million in fines. This should say it all.

"They've tried to turn the mortgage business into . . . a production line," banking lobbyist Rick Hohlt said. "But in reality you're dealing with humans. You're not building cars or widgets."

And there was money to be made from the confusion.

Although the bankers touted the registry as a way to make mortgage processing more efficient, thus benefiting borrowers, they weren't shy about admitting their main goal: more profits. They estimated that the cost of preparing, recording and mailing 11.1 million loan documents totaled about $210 million in the previous year alone.

In addition, the mortgage bankers had greater ambitions of hyper-charging the market for mortgage-backed securities. Invented in the late 1970s by a trader at Salomon Brothers, these investment packages pooled together thousands of mortgages. They were then sold not only to banks but to pensions, insurance companies and other big investors. The only thing holding back wider securitization, they believed, was the time-consuming and costly chore of recording and re-recording ownership of the individual mortgages. In the years to come, the growth of MERS and securitization went hand in hand.

There was almost nothing they didn't rig. There was almost nothing they didn't steal. And if there was something they forgot to rig, they devised a way to rig it. If there was something they forgot to steal, they found a way to pick a lock or kick in a door. It was a festival of criminal greed and amoral maneuvering that absolutely had nothing to do with the national interest of the political entity that is the United States. That entity was merely something to be cored and husked, and all of us along with it. If this decision stands, and I have my doubts that it will, maybe we can get a little bit of it back, maybe a nation can assert itself against the people who see it as something else to pillage.